1. What is Compound Interest?

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. For fixed deposits, compounding allows your investment to grow faster as interest is earned on interest.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount including interest (INR)
• \( P \) — Principal investment amount (INR)
• \( R \) — Interest rate per compounding period (annual rate divided by periods per year)
• \( N \) — Number of compounding periods (years × periods per year)

Explanation: The formula accounts for exponential growth of your investment through periodic compounding.

3. Importance of FD Calculation

Details: Accurate FD calculations help in financial planning, comparing investment options, and understanding how compounding can significantly increase returns over time.

4. Using the Calculator

Tips: Enter principal amount in INR, annual interest rate in percentage, tenure in years, and select compounding frequency. All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What is the minimum deposit for HDFC FDs?
A: HDFC Bank typically requires a minimum of ₹5,000 for regular fixed deposits, though amounts may vary for special schemes.

Q2: Are HDFC FD interest rates fixed?
A: Yes, the interest rate is fixed for the entire tenure at the time of opening the FD.

Q3: How is interest taxed?
A: Interest earned is taxable as per your income tax slab. TDS may be deducted if interest exceeds ₹40,000 (₹50,000 for senior citizens) annually.

Q4: Can I withdraw my FD prematurely?
A: Yes, but a penalty (usually 0.5-1% lower interest) may apply for premature withdrawals.

Q5: What's the difference between monthly and quarterly compounding?
A: Monthly compounding calculates interest every month, while quarterly does it every 3 months. Monthly compounding yields slightly higher returns.